CASE STUDY : Converting TNS – How to Wag the Dog

The purchase of Conversa is the most recent in long line of acquisitions TNS has made in this country. But there were none of the usual trappings of buying the competitor, sacking its managers, dissolving the acquired brand and absorbing its clients.
Instead, TNS installed Conversa’s managing director Michael Lucas behind the dials of the new entity and TNS New Zealand was renamed TNS Conversa.
At the time of the takeover (mid-2007) Chris Riquier, managing director of TNS Oceania said TNS bought Conversa because of its innovative and comprehensive approach to market research. According to Riquier, since its inception in 2002, Conversa Global has grown to an annual turnover of $17 million, making it the fastest-growing research company in New Zealand. Apparently it’s done that by delivering more than just numbers and data, providing real value-added research consultancy with combination of commercial and market research experience.
So it’s no surprise that the newly merged company is openly and happily leveraging Conversa’s consultancy approach to market research into other parts of its network.
The merger of the two companies has resulted in new business which takes different approach to traditional market research companies. TNS Conversa’s model is to engage with management to understand the underlying drivers of the commercial problem – and discover the potential levers that management can pull – and then to use blend of market research and commercial analysis to develop actions and insights for the solutions to the problem.
Bringing the client list of the two companies together has created an impressive portfolio, which includes Telecom NZ, Contact Energy, Yellow Pages, National Bank, Southern Cross, Les Mills International, overseas giant Chevron, Lion Nathan, Westpac, The Warehouse, Ford, Air NZ, Fonterra, Tourism NZ, GlaxoSmithKline, Ministry of Social Development, Fisher & Paykel, Fairfax, Restaurant Brands and several other leading companies.
Andy Coster, director TNS Conversa (previously director at Conversa Global) explains the merger, saying TNS wanted to implement the Conversa model into the TNS business in New Zealand and the Conversa people were the obvious candidates to do this.
“The reason this is such an exciting prospect for New Zealand business is that global company knew they were buying New Zealand expertise and intellectual property, but they also realised that New Zealand business people were the best ones to carry out their wider strategy.”
To put the unusual takeover event in context, it is useful to know bit of TNS’ recent history in New Zealand, and meet one of its key regional people – Jamie Hall.
With Chris Bourke, Hall established CM research in 1983. Through CM, Hall and Bourke licensed the world’s first continuous brand-tracking monitor, developed in Australia. This represented breakthrough in brand research, and rapidly found global market.
However profitable this situation might have been, it marked only the beginning of Hall’s trajectory through the global research industry.
By 1997, CM Research was owned by American giant NFO, and in 2002 NFO itself was sold back over the Atlantic, to the English TNS. Each time one of these transactions took place (the latter for hefty US$525 million) Jamie Hall ascended to positions of increasing global influence. Today, he is the boss of all those parts of the TNS empire that are in neither Europe nor North America, that is: Africa, the Middle East, Asia-Pacific, and Latin and South America.
Since that first licensing agreement in 1983, Hall has made second career of acquiring market research IP. Whereas New Zealanders are avid hawkers of research tools on the international market, TNS – the largest custom research company on earth – has an equally voracious appetite for acquiring them. The latest of which – the basis of this story – was Parnell-based Conversa Global.
Since its inception in 2001, this young ascendant has made its mark in the research industry, having wrested many blue-chip clients from the clutches of long-standing industry players.
While other research houses made waves with proprietary applications, Conversa has taken wholly different approach, which – bluntly – has nothing to do with research, and everything to do with business.
Conversa likes to work at the uppermost level of management – director Michael Lucas has no qualms finding his way to the board room, which is bigger deal than it sounds.
As result of strong senior relationships, Conversa has succeeded in winning the trust of clients – such as Telecom – to the point where they share large amount of financial information. This leads to the ultimate research boon: to be able to incorporate client revenue numbers into customer-based research predictions, something that no amount of methodological prowess will achieve on its own.
As Lucas says, “We make sure that when we get number, we reconcile it back to the internal financials of the organisation. lot of research companies don’t close that loop.”
Lucas himself is not researcher, but comes from background in business consultancy, and this is crucial to how he regards the success of his team. As he simply puts it, industry outsiders “have more understanding of how business works”.
This strategy is strongly endorsed by Telecom’s customer insight manager, Val Green. “I think they’re doing something fundamentally different… they provide full financial implications of their recommendations, which they’re able to do because they’ve got financial analysts as well as researchers.”
Green makes it very clear that Telecom withholds nothing that will assist TNS Conversa to enhance their findings with bottom-line implications. “If I stood between them and what they needed, I wouldn’t be doing my job of putting the customer at the centre of our business.”
And yet, when Lucas talks about research, he says very little that you wouldn’t hear from the mouth of any long-standing researcher. He uses standard research terms like ‘consultancy’, ‘engagement’, ‘value-chain’ and ‘actionable’ with ease.
In sense, Lucas and his team have researched the market for market research, identified the fundamental offering across the industry (call it consultancy), and then applied this with single-minded dedication. It proved to be successful approach.
And so, with Conversa taking progressively larger chunks of revenue directly off the bottom line of TNS and competitors, the industry was clearly obliged to pay attention. Both Hall and Chris Riquier (MD TNS Oceania) insist that the acquisition recognises Conversa’s skills in an area that TNS would have moved into anyway, and that the acquisition simply accelerated the process.
More cynically, some claim it was merely strategy for TNS to regain some of the business it had lost. Obviously, an exclusive deal for Telecom’s quantitative brand research would motivate any number of growth-mode acquisitions, and Jamie Hall is known to have soft spot for that particular growth industry. In his words: “I think in any of the markets… you must have strong telecommunications client.”
The reasons why are obvious: copious growth, innovation galore, budgets aplenty.
But there is also strong evidence suggesting that the acquisition is truly motivated by curiosity within TNS to acquire Conversa’s operating mode, and that the client roster is merely symptom of the latter’s potency in the research market. This is the real prize for TNS. After all, how attractive would Conversa be if it hadn’t so convincingly poached the industry’s favourite clients?
The question now is, how far can Lucas and his crew of consultants take their model? Lucas, Hall and Riquier all insist that the global TNS group wants to do what Conversa’s doing, so if the new regime can bump up the bottom line, they’ll be shoe-in to take their approach into Australia. From there, it’s clear that they hope to roll out their consultancy-based offering thro